Should i from an LLC

Discussion in 'Business Operations' started by grassmanak, Feb 17, 2007.

  1. grassmanak

    grassmanak LawnSite Senior Member
    Posts: 792

    This is my 3rd year in business. Im debating whether or not i should switch to an LLC or not. I called the sec. of state and got the aper work. Cost is 125.00 plus i have to run a notice of orginization in the newspaper for 3 weeks. Is this right for me, how does this change things for taxes and stuff.
     
  2. supercuts

    supercuts LawnSite Silver Member
    Posts: 2,785

    im in the same boat, im doing it for a little more legal protection adn to keep from giveing my SS number out as my tax number.
     
  3. ArizPestWeed

    ArizPestWeed LawnSite Bronze Member
    Posts: 1,457

    what is wrong with giving out SSN????????????
     
  4. StBalor

    StBalor LawnSite Senior Member
    Posts: 798


    I asked my accountant the same thing. She told me best to go as "S"corp. Here is the link that i started when i was trying to figure out the differences.
    http://www.lawnsite.com/showthread.php?t=173394&highlight=llc+"S"corp

    Here is another. http://www.lawnsite.com/showthread.php?t=173876&highlight=llc+"S"corp

    Best just to read and decide for yourself. use the search feature and type in llc or "S"corp
     
  5. motoguy

    motoguy LawnSite Member
    Posts: 78

    This will be our first year of operation, and we just met with a CPA. Our CPA recommended we go with an LLC. He said the business loss rules for LLC's are more generous than for S-Corps. As such, during the first years (when you're likely to show the most loss), an LLC is the way to go.

    Also, it's relatively easy to convert an LLC into an S-Corp, once the early "loss" period is over, and when the increased revenue is worthy of S-Corp tax benefits. If you -start- as an S-Corp, however, you're stuck being an S-Corp. Starting as an LLC allows you to "keep your options open".

    So...the LLC gives us the flow-through taxation, which isn't the best. However, at the (expected) low levels income in the first few years, this isn't really an issue. Especially when considered in conjunction with the more liberal guidelines for LLC's and yearly business loss.

    Once the losses slow down (after first year, or 2), and the income starts to go up (so that the taxes are more of an issue), we then convert from an LLC to an S-Corp for the tax issues (low salary for taxation, and dividends at the end of the year).

    That's what our CPA recommended, and that's how we're going about it, anyway.
     

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